Africa: Mobile Industry to Add U.S.$150 Billion to Africa’s Economy By 2022, As Subscribers Rise

Africa: Mobile Industry to Add U.S.$150 Billion to Africa’s Economy By 2022, As Subscribers Rise

The mobile telecommunications ecosystem will add more than $150 billion in value to sub-Saharan Africa’s economy in the next four years, equivalent to nearly eight per cent of the region’s GDP.

Last year, mobile technologies added $110 billion to the continent’s economy, notes the 2018 Mobile Economy report by GSMA, the body that represents the interests of mobile operators worldwide.

GSMA is pegging the rise to the growing number of mobile subscriptions, which it expects to hit 634 million – equivalent to 52 per cent of the population – by 2025, from 44 per cent as at the end of 2017.

“For many citizens across the region, particularly those living in rural areas, a mobile phone is not just a communication device, it is also the primary channel for getting online and a vital tool for improving their lives,” said GSMA chief regulatory officer John Giusti.

“More needs to be done to connect underserved populations across sub-Saharan Africa, including coming up with investment-friendly policies and supportive regulatory frameworks.”

Smartphone connections

As at December 2017, the total number of smartphone connections stood at 250 million, equivalent to just a third of the total connections base; still the GSMA expects the adoption rate to double by 2025 to reach two-thirds of total connections, equivalent to an installed base of around 690 million.

After rapid growth in the first half of this decade, that saw overall subscriber penetration grow by 21 per cent since 2010, mobile adoption in the region is expected to slow in coming years to an annual growth rate of 4.8 per cent between 2017 and 2022.

“Subscriber growth has slowed in recent years as the industry confronts the challenges of affordability and a youthful population, but growth rates remain well ahead of global averages,” the GSMA said.

Despite the slowing subscriber growth, GSMA forecasts that the industry’s contribution to sub-Saharan Africa’s economies will grow by an average of $10 billion every year in the next four years, to reach $150 billion by 2022, as countries benefit from improvements in productivity and efficiency, particularly due to the increase in mobile Internet adoption.

As at 2017, the mobile ecosystem in sub-Saharan Africa supported three million jobs and contributed almost $14 billion to the funding of the public sector in the form of general taxation as well as sector-specific levies on the consumption of mobile services.

Mobile money

At least two-thirds of the countries in the region had excise taxes on airtime, SIM cards or mobile money transactions, or higher VAT rates on the usage of mobile services which represented more than 20 per cent of all mobile taxes directly supported by consumers in the region.

Mobile money also continued to expand rapidly across the region, with the total value and number of transactions growing by 14 per cent and 18 per cent to reach $19.9 billion and 1.2 billion, respectively in 2017.

East Africa remains the largest mobile money market, accounting for 56.4 million of total 122 million active 90-day accounts and 51 out of the total 135 live mobile money services across the region at the end of 2017.

The mobile industry is also playing a key role in delivering the United Nations Sustainable Developments Goals, predominantly through increased connectivity and access to information, as well as supporting a fast-growing tech start-up ecosystem.

There were 202 active mobile health (mHealth) services in the region in 2017, a 58 per cent increase from 2016, taking the proportion of the region’s population getting health services via their mobile phones to about 11 percent.

Tech start-up

Mobile is becoming a key factor in sub-Saharan Africa’s fast-growing tech start-up ecosystem, with many start-ups in Africa now using mobile as the primary platform to create solutions that address a range of socioeconomic challenges.

A total of $560 million was raised by 124 tech start-ups across Africa in 2017, 53 per cent up from 2016, in which sub-Saharan Africa accounted for around $515 million in more than 100 deals.

This year has already seen a number of high-profile investments, including the $3.5 million put in Kenyan mobile survey platform mSurvey to fund its expansion into Nigeria and South Africa, and $1.1 million in seed funding for Nigerian start-up Piggybank.ng, which offers online savings plans to low- and middle-income Nigerians.

The GSMA also notes that mobile operators already play a key role in supporting the tech start-up ecosystem in sub-Saharan Africa through initiatives to identify and develop new talent and solutions, including direct funding of incubators, competitions and mentorship programmes.

The report highlights Orange’s $58 million African start up investment initiative, launched in June 2017 and dedicated to African start-ups that utilise mobile network capabilities, and Safaricom’s BLAZE BYOB TV show, a start-up training and funding competition.

Source: Victor Kiprop, The East African



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